Effective spectrum pricing helps boost mobile services

The GSMA’s spectrum team has along with GSMA Intelligence and NERA Economic Consulting done analysis that provides strong evidence to directly link spectrum prices with slow network rollouts, reduced network quality and poorer mobile coverage.

Two global reports along with deep dives in Latin America, Europe and developing countries all show the negative impacts.

The latest global one, titled ‘The Impact of Spectrum Prices on Consumers’ confirms that countries with poor spectrum policies – which either inflate spectrum or delay spectrum assignments – are leading to millions of people being left unable to access mobile broadband services or experiencing reduced network quality.

The report, conducted by GSMA Intelligence, is based the most detailed econometric study ever conducted into spectrum pricing as it considers more countries than previous studies, more consumer outcomes, and controls for a wider range of other potential explanations for these outcomes.

“Spectrum auctions can’t be viewed as cash cows anymore,” said Brett Tarnutzer, Head of Spectrum at the GSMA. “Any government that prices spectrum to maximise revenue now does so with full knowledge that its actions will have negative repercussions on citizens and the development of mobile services. We now have clear evidence that shows by restricting the financial ability of operators to invest in mobile networks millions of consumers are suffering.”

What next?

For countries that want to adopt spectrum policies that focus on setting the stage for the best possible mobile services, the first steps are to:

1. Set modest reserve prices and annual fees and rely on the market to set prices;

2. License spectrum as soon as it is needed as this helps avoid artificial spectrum scarcity;

3. Avoid measures that increase risks for operators (e.g. that put the value of their company in jeopardy); and

4. Publish long-term spectrum award plans that prioritise public welfare benefits over state revenues.

These points are further developed in the GSMA’s policy position paper on spectrum pricing. At the end of the day, the main goal of governments around the world should be to get the most out of its mobile spectrum resources. And that is not the highest possible prices.